Questions from General Taxation

Q: Cerulean Corporation has two equal shareholders, Eloise and Olivia. Eloise

Cerulean Corporation has two equal shareholders, Eloise and Olivia. Eloise acquired her Cerulean stock three years ago by transferring property worth $700,000, basis of $300,000, for 70 shares of the...

Q: Siena Industries (a sole proprietorship) sold three § 1231 assets

Siena Industries (a sole proprietorship) sold three § 1231 assets on October 10, 2015. Data on these property dispositions are as follows. a. Determine the amount and the character of the...

Q: Petrel Corporation has accumulated E & P of $85,000

Petrel Corporation has accumulated E & P of $85,000 at the beginning of the year. Its current-year taxable income is $320,000. On December 31, Petrel distributed business property (worth $140,000, adj...

Q: Parrot Corporation is a closely held company with accumulated E & P

Parrot Corporation is a closely held company with accumulated E & P of $300,000 and current E & P of $350,000. Tom and Jerry are brothers; each owns a 50% share in Parrot, and they share management re...

Q: Robin Corporation would like to transfer excess cash to its sole shareholder

Robin Corporation would like to transfer excess cash to its sole shareholder, Adam, who is also an employee. Adam is in the 28% tax bracket, and Robin is in the 34% bracket. Because Adam’s contributio...

Q: Your client, Raptor Corporation, declares a dividend permitting its common

Your client, Raptor Corporation, declares a dividend permitting its common shareholders to elect to receive 9 shares of cumulative preferred stock or 3 additional shares of Raptor common stock for eve...

Q: Ken purchased 10,000 shares of Gold Corporation common stock six

Ken purchased 10,000 shares of Gold Corporation common stock six years ago for $160,000. In the current year, Ken received a preferred stock dividend of 800 shares, while the other holders of common s...

Q: Denim Corporation declares a nontaxable dividend payable in rights to sub-

Denim Corporation declares a nontaxable dividend payable in rights to sub- scribe to common stock. One right and $60 entitle the holder to subscribe to one share of stock. One right is issued for ever...

Q: Jacob Corcoran bought 10,000 shares of Grebe Corporation stock two

Jacob Corcoran bought 10,000 shares of Grebe Corporation stock two years ago for $24,000. Last year, Jacob received a nontaxable stock dividend of 2,000 shares in Grebe. In the current tax year, Jacob...

Q: Joseph and Erica, husband and wife, jointly own all of

Joseph and Erica, husband and wife, jointly own all of the stock in Velvet Corporation. The two are currently involved in divorce proceedings, and pursuant to those negotiations, they have agreed that...